Self employed & tax returns

Self Employed? Tax Return Deadline – 31st January

If you are self-employed, the deadline for submitting your April 2022 tax return is looming at the end of this month. If you have not already done so we would strongly recommend submitting it as soon as possible to ensure you do not miss the deadline. There are penalties if you do.

It’s also important if you’re thinking about getting a new mortgage or re-mortgaging your existing property as the lender assesses self employed income differently.

Most lenders will use the income as shown on the last two-year tax calculations and HMRC tax overview, especially if you are sole trader or work under a partnership.

If your business in incorporated, with full company accounts produced, there are more options available with lenders. We can access lenders who allow net profits to be used, which will often be a higher figure than the level of dividends withdrawn, which may increase the amount you can borrow. Lenders also may allow costs such as pension contributions or car payments to be added back in for income. There are also lenders who can look at latest years figures and one year’s trading.

Another benefit of a business set up in this way is that lenders may use your company accounts if they are more recently dated than your self assessments.

The majority of lenders require income verification documents to be dated within 18 months so most clients we have helped out in the past 3-4 months have already processed their 2022 return, where the business year end allows. You probably won’t be surprised to hear that many people, particularly those that process their own assessments rather than using an accountant, including Buy to Let Landlords, leave it to last minute!

We are specialists in helping self-employed clients and will work closely with you and your accountant to find the right lender to suit your circumstances. So, if you’re looking to purchase or remortgage in the near future, please contact our office on 0161 711 1720 or visit website – we’ll be happy to help.

Key Dates for 2023

5th April – the end the financial year

Although you do not need to have a tax return processed until 31st January 2024, if you want to use the income from the 2023 tax return for a mortgage application, for example if the figures are higher or if it is your first annual return, you can process your return early so we have the documents available to support the mortgage application.

6th October – lenders will require 2023 tax documentation to support a mortgage application

Most lenders need income documents to be no older than 18 months.
This means that as of the 6th of October, they will no longer use the 2022 tax returns and you will need to provide the 2023 documents. If you are looking to apply for a mortgage after this, we would strongly recommend processing your tax return. .